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POCKET GUIDE TO AUSTRALIAN BANKNOTES 1 Australian Panorama THE NATION'S FIRST BANKNOTES

Political Preparations

Australia's first national banknotes were printed between 1913 and 1914. This event was preceded by political changes that had created the framework for their issuance. In 1901 the Federation of Australia brought together the country's six self-governing colonies into political union with federal structure – the Commonwealth of Australia.1 The Federation of the country had been motivated partly by the wish to develop a coordinated, national economy, and the constitution of the new nation gave the Commonwealth Government the power to legislate in regard to its currency.

Almost a decade later, the legislation for the country's currency was enacted by the Labor Government of Prime Minister, Andrew Fisher. Known as the Australian Notes Act 1910, it prepared the way for the printing of the nation's first series of banknotes, assigning responsibility for their issuance to the Commonwealth Treasury. The continuing use of private banknotes was discouraged by an annual tax of 10 per cent.2

Prime Minister Andrew Fisher calls for three cheers at the ceremony for the laying of the foundation stone for the Commonwealth Bank of Australia's Head Office, Sydney 14 May 1913.

Reserve Bank of Australia Archives PN-000839

Crowds gather for the opening of the Commonwealth Bank of Australia's Head Office, Martin Place, Sydney, 22 August 1916. The sign in the background relates to the First World War: ‘Enlist the Empire Calls’.

Reserve Bank of Australia Archives PN-000850

The establishment of a government-owned bank, comparable to the Bank of England, was promoted at this time by King O'Malley, who had been elected to the first Federal Parliament. The proposed bank would issue the nation's banknotes, conduct the Government's accounts and hold the reserves of the banking system.

In 1911 the Commonwealth Bank, the forerunner of the Reserve Bank, was founded and the following year Denison Miller was appointed the Bank's first Governor. Despite the earlier proposals, the Commonwealth Bank was not given initially the role of central banking, and the issuing of banknotes remained with the Commonwealth Treasury. In 1920 the responsibility was transferred to the board of directors of the new Note Issue Department within the Commonwealth Bank of Australia, known as the Notes Board. It passed to the Bank's board of directors in 1924 when the Commonwealth Bank Act was amended with the purpose of establishing a central bank. The Commonwealth Bank itself became the sole issuer of the banknotes from 1945 until 1960, when this function passed to the Reserve Bank of Australia as the nation's central bank.

Installation of the flagpole on the roof of the Commonwealth Bank of Australia's head office, 12 April 1916, looking across to the clock tower of the General Post Office, Sydney

Reserve Bank of Australia Archives PN-000798

Commonwealth Bank of Australia's Head Office, Martin Place, Sydney, which opened in 1916. Branches had been established in all state capital cities, Canberra, Townsville and London.

The sign ‘Before Sunset’ relates to the Bank's sale of loan bonds to support the First World War effort. The Bank's response to the war developed its role in the distribution of banknotes and in organising the nation's finances.

Reserve Bank of Australia Archives PN-001624

Photograph by Milton Kent of the first meeting of the Notes Board, 17 December 1920, showing left to right: Charles Cerutty, John Joseph Garvan, Sir Denison Miller (Chairman), Hugh Traill Armitage (Secretary), and George Swinburne.

Reserve Bank of Australia Archives PN-001879

Intermediary Measures

Superscribed Australian £20 banknote, previously a Bank of Adelaide banknote.

Reserve Bank of Australia Archives NP-002100

Although the 1910 legislation for a national currency was in place, the Commonwealth Treasury was unprepared to issue quickly the new banknotes. As an intermediary measure the Government purchased banknotes from the private banks and the Queensland Government, and overprinted, or ‘superscribed’, them with the words: “AUSTRALIAN NOTE Payable in Gold Coin at the Commonwealth Treasury at the seat of Government.”3

The superscribed banknotes were Australia's first banknotes that were acceptable across the nation. It was intended to withdraw them once the new banknotes were issued, but they were kept in circulation owing to the shortage of currency following the outbreak of the First World War in 1914.

References

1. The six colonies were New South Wales; Queensland; South Australia; Tasmania; Victoria and Western Australia.

2. Prior to 1910, the issuance of banknotes was not regulated and the banknotes of private banks (and of the Queensland Government) continued to circulate as Australia's paper currency. The total amount of banknotes that banks could issue was limited by their gold reserves.

3. The ambiguous wording ‘seat of government’ might be explained by the fact that at the time of the notes' superscription, Melbourne was designated Australia's temporary capital city. The name of the future capital – Canberra – would not be decided until 1913 and Parliament would not relocate there until 1927.

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